By Sammy Caiola
The Sacramento Bee
WWR Article Summary (tl;dr) For many entrepreneurs, the Affordable Care Act transformed how and where they worked. The reform has given thousands of people an option to quit their desk jobs and retain coverage while building a small business or exploring an idea for a startup.
The Sacramento Bee
On a recent Friday at Old Soul Coffee Roasters in Sacramento, actor Ian Hopps hunched over his laptop as he edited a flier for an upcoming performance with the Davis Shakespeare Ensemble. He had just come off a shift from the East Sacramento restaurant where he waits tables and was killing time before his curtain call for “The Tempest” later that evening.
The 26-year-old lives paycheck to paycheck as a freelance actor/part-time server and doesn’t get health benefits through either position, he said. After turning 26 and becoming ineligible for his parents’ insurance, he enrolled in a Medi-Cal plan, made available only after the Affordable Care Act became the law of the land in 2010.
With private insurance out of his price range, Hopps said he was relieved to have an accessible option and not have to “bite the bullet” of taking on a full-time job for benefits. As Medi-Cal and other federal health programs face an uncertain future, part-time and self-employed workers such as Hopps wonder how they’ll pursue their careers, and stay covered, if the law is repealed.
“I love getting to work gig to gig, because it allows me the freedom to pursue other projects on the side,” he said. “If I had to work a 9 to 5 just for the benefits, I wouldn’t be able to do as much as I do. … I’d probably just keep gigging and hope I don’t get sick.”
More than any other state, California embraced former President Barack Obama’s Affordable Care Act, expanding eligibility for the low-income Medicaid program to childless adults and creating the Covered California exchange, which offers subsidized plans to people who can’t afford private insurance. About 3.7 million people have enrolled in Medicaid since the health law was implemented, and 1.3 million now have plans through Covered California.
While that expansion brought in many people living near or below the poverty line, it also includes independent workers in the so-called “gig economy” — a growing class of professionals who patch together income from multiple jobs. The sector has thrived as sharing economy companies such as Uber, TaskRabbit and Thumbtack draw more people to driving, tutoring, freelance software design and other services. The majority of those workers are not entitled to employee benefits, including health care.
More than 3 million people in the U.S. are classified as independent workers, according to estimates from the U.S. Census Bureau. From 2004 to 2014, self-employed people working in repair and maintenance, personal and laundry services, pet sitting and other jobs belonging to the census bureau’s “other category” grew by nearly 1 million people, or 31 percent, according to bureau data.
A Republican proposal to repeal and replace the Affordable Care Act now puts in danger the health insurance of independent workers who received Medi-Cal through the federal expansion. The proposal also seeks to replace the Covered California subsidies, based on age, income and location, with tax credits based primarily on age.
The credits likely won’t go very far in covering high medical costs and premiums in Northern California, said Gerald Kominski, director of the UCLA Center for Health Policy Research. The nonpartisan Kaiser Family Foundation estimates that Sacramento County residents will see on average about a 15 percent reduction in tax credits with the GOP plan.
A February study from the UC Berkeley Labor Center found that about 25 percent of restaurant and food service workers could lose coverage in the event of a federal health law repeal, as could 22 percent of auto mechanics, hair stylists and people classified in the study’s “other services” category. Businesses employing fewer than 50 people are not required by current law to insure their employees, and larger businesses must insure only their full-time workers.
Stride Health, a San Francisco-based company that helps people in the gig economy find insurance plans, estimates the number of people in the sector is even higher. The company serves about 5 million workers in the U.S., about a third of whom are in California, said CEO Noah Lang.
“The Affordable Care Act empowered individuals to break away from traditional work and build an independent career — whether that’s freelancing or driving for Uber or starting their own business,” Lang said. “It’s removed for them the worry of ‘Where am I going to get coverage for me and my family, and how much is it going to cost?’ ”
About 14 percent of California workers ages 18 to 64 are insured either through the Medi-Cal expansion or a private plan purchased on a Covered California exchange with subsidies, according to the UC Berkeley study. Some work as independent contractors in the gig economy, while others are part-time employees in food service, retail, agriculture and education.
Mehran Mesbah, a visual artist and an adjunct professor at California State University, Sacramento, said he only gets coverage through the school when he’s teaching two classes — usually about half the year. When he’s bumped off his Blue Shield plan, the 37-year-old purchases a temporary plan through Covered California so he’s insured while he works other jobs including construction and freelance sculpting.
“I’m definitely in a jack-of-all-trades situation,” he said. “For the most part I could see doctors on that, and I could see doctors on Covered California. It was nice to have that year-round.”
Taylor Ramsey, 27, said she wasn’t offered a health care package when she worked for a Sacramento beauty salon because she was considered an independent contractor. She became temporarily uninsured when she aged out of her parents’ insurance because her other part-time job, at a clothing and furniture store, wasn’t bringing in benefits, either.
Unable to afford private insurance, she enrolled instead in a plan through Covered California. Later that year, Ramsey got into a serious car accident that required surgery and follow-up treatments. She was surprised to learn that almost all of her bills, totaling several thousand dollars, would be covered.
That coverage also helped Ramsey save money while she developed her own business, TR Social Marketing. Just this month, the company was acquired by a larger firm, which will soon provide her with job-based benefits.
“It saved me. I don’t know what I would have done,” Ramsey said of the insurance policy she bought through Covered California. “It was so weird to go from having this great insurance to having nothing. It was really nice to have that cushion.”
For entrepreneurs such as Ramsey, the Affordable Care Act transformed how and where they worked, said Natalie Foster, a fellow in the San Francisco office of the digitally focused think tank New America. The reform gave thousands of people an option to quit their desk jobs and retain coverage while building a small business or exploring an idea for a startup, Foster said.
“For generations, we’ve put all our benefits and protections through employers,” Foster said. “The (Affordable Care Act) changed that. For the first time in history you could have access to a benefit outside your employer. It was a huge step in the direction of (health insurance) portability for changing work.”
Benjamin Schwartz, the 32-year-old owner of Benjamins Shoes in the Warehouse Artist Lofts, said he was thinking about the Affordable Care Act as he considered leaving his state job to start his own high-end shoemaking business in 2014.
When he called the Medi-Cal program to ask about his options, he didn’t even have proof of income, he said, but they enrolled him anyway.
“Health care has been a big concern, especially recently, since we’re not sure what’s going to happen,” he said. “I’d wanted to run a business for a long time, and I really wanted to do something I was passionate about. The first couple of years are the most stressful, and that’s when it’s most needed.”